We are still in an overall bull market and many stocks that smart money investors were piling into surged through October 17th. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 45% and 39% respectively. Hedge funds’ top 3 stock picks returned 34.4% this year and beat the S&P 500 ETFs by 13 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like The Hackett Group, Inc. (NASDAQ:HCKT).
Is The Hackett Group, Inc. (NASDAQ:HCKT) a buy right now? Investors who are in the know are getting more optimistic. The number of long hedge fund bets advanced by 5 recently. Our calculations also showed that HCKT isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a look at the recent hedge fund action surrounding The Hackett Group, Inc. (NASDAQ:HCKT).
Hedge fund activity in The Hackett Group, Inc. (NASDAQ:HCKT)
At the end of the second quarter, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of 50% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in HCKT over the last 16 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Douglas T. Granat’s Trigran Investments has the most valuable position in The Hackett Group, Inc. (NASDAQ:HCKT), worth close to $27.5 million, comprising 4.6% of its total 13F portfolio. On Trigran Investments’s heels is Renaissance Technologies, with a $18.4 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other professional money managers that are bullish consist of Chuck Royce’s Royce & Associates, Cliff Asness’s AQR Capital Management and Paul Marshall and Ian Wace’s Marshall Wace LLP.
As aggregate interest increased, key hedge funds have jumped into The Hackett Group, Inc. (NASDAQ:HCKT) headfirst. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, established the most outsized position in The Hackett Group, Inc. (NASDAQ:HCKT). Marshall Wace LLP had $4.7 million invested in the company at the end of the quarter. Robert B. Gillam’s McKinley Capital Management also initiated a $1.5 million position during the quarter. The following funds were also among the new HCKT investors: Ken Griffin’s Citadel Investment Group, David Harding’s Winton Capital Management, and Paul Tudor Jones’s Tudor Investment Corp.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as The Hackett Group, Inc. (NASDAQ:HCKT) but similarly valued. These stocks are Puma Biotechnology Inc (NASDAQ:PBYI), UMH Properties, Inc (NYSE:UMH), City Office REIT Inc (NYSE:CIO), and Waitr Holdings Inc. (NASDAQ:WTRH). All of these stocks’ market caps are closest to HCKT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PBYI | 17 | 130423 | -6 |
| UMH | 9 | 13264 | 0 |
| CIO | 6 | 24486 | 1 |
| WTRH | 17 | 135233 | -5 |
| Average | 12.25 | 75852 | -2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $76 million. That figure was $78 million in HCKT’s case. Puma Biotechnology Inc (NASDAQ:PBYI) is the most popular stock in this table. On the other hand City Office REIT Inc (NYSE:CIO) is the least popular one with only 6 bullish hedge fund positions. The Hackett Group, Inc. (NASDAQ:HCKT) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately HCKT wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on HCKT were disappointed as the stock returned -2% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
